the point trying to be made is if you write it off and are audited, the agent may ask you to prove it was a loan rather than a gift. a written agreement is much better than a verbal one. from the other party's perspective, it's better if he says it's a gift because he will not pay taxes on it. whereas if he says its a loan, then there's "forgiveness" which is supposed to be included in his tax return as income.
if he made repayments and maybe paid you interest which you could prove , you would likely prevail without a written agreement
don't know how much is involved, but net capital losses are limited to $3,000 per year ($1,500 if married filing separately)
